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Court’s own interpretation and interference on decision made by Tendering Authority is invalid: SC

Court’s own interpretation and interference on the decision made by the Tendering Authority is invalid: SC reiterates

M/S Galaxy Transport Agencies, Contractors, Traders, Transports And Suppliers Vs M/S New J.K. Roadways, Fleet Owners And Transport Contractors & Ors.

Special Leave Petition (Civil) No. 12766 OF 2020)

December 18, 2020.

Learned senior counsel for the Appellant - Rana Mukherjee

Learned senior counsel for Respondent (JK Roadways) - Altaf H. Naik

Learned additional standing counsel for Union Territory of Jammu & Kashmir - Shashi Juneja

The Hon’ble Supreme Court Justices ROHINTON FALI NARIMAN, NAVIN SINHA and K.M. JOSEPH have set aside the Division Bench’s judgment and restored the learned Single Judge’s judgment of this particular case. The decision made by the tendering authority was held valid.

The facts of the case states that, the Inspector General of Police, Kashmir Zone has invited online tenders (e-tenders) on 18.02.2020 [“N.I.T.”] from reputed transporters, registered firms/associations for the supply of various types of commercial vehicles (without fuel) for the carriage of troops and equipment for the Financial Year 2020-2021. Four parties, namely, M/s Associated Contractors, M/s Quareshi Transport Co., M/s Galaxy Transport Agencies, Contractors, Traders, Transports and Suppliers and M/s New J.K. Roadways, Fleet Owners and Transport Contractors submitted their bids and uploaded through an e-tendering system. The tender process consisted of a technical bid and a financial bid. The Appellant’s financial bid was found to be the lowest was allotted the contract for the supply of commercial vehicles for the Financial Year 2020-2021. A writ petition was filed by JK Roadways seeking the quashing of the allotment of the contract contending that, it was made in favour of the Appellant. The learned Single Judge held that,

“16. Considering the submissions of the parties and in view of the law laid down by the Supreme Court and also the fact that the contract is for the year 2020-21, which has already commenced w.e.f. 1st April, 2020, public interest would be severely jeopardized if the respondents are not allowed to execute the contract because the bid of respondent No. 5 was the lowest. It is, therefore, in public interest not to interfere in the allotment of contract in favour of respondent No. 5, who satisfied the criteria as laid down in technical bid as he had furnished list of HMV & LMV vehicles which was the most essential condition of the tender. Thus, the petitioner having been found ineligible cannot now question allotment of contract to respondent No. 5 because the petitioner is not similarly situated.”(Para.3d)

JK Roadways filed a letters patent appeal before the Division Bench of the High Court of Jammu and Kashmir. The Division Bench found that JK Roadways, having satisfied Condition No. 31 of the N.I.T., was wrongly disqualified by the tendering authority. The requirement under Condition No. 27 of the N.I.T. of holding work experience of at least 5 years was considered and the Bench found that the Appellant had experience of supplying vehicles only for a few months in the years therefore, the Appellant could, at best, be said to hold work experience of supplying vehicles for 1 year only. Thus, Condition No. 27 of the N.I.T was held to be remained unfulfilled by the Appellant. Therefore, the contract awarded in favour of the Appellant was quashed and the official respondents were directed to invite fresh tenders and complete the process within a period of 1 month by the Division Bench. It is against this judgment the present appeal is preferred.

Learned senior Counsel for the Appellant contended that the Division Bench was wrong on both counts. He stated that, a plain reading of Condition No. 31 of the N.I.T. showed that “both HMV/LMV” had to be supplied, and as JK Roadways only supplied a list of HMVs, it was obviously ineligible. Further, he placed reliance upon the judgments of this Court stating that the authority that floats the tender is the best judge on how a tender condition should be read. Accordingly, his view was that, the Division Bench overstepped its mark in construing the eligibility conditions of the N.I.T. contrary to the tendering authority’s interpretation. Answering to the issue of work experience condition, he adverted to the work experience certificates from the Financial Years 2014-2015 to 2018-2019, which showed that the Appellant possessed the necessary work experience.

The additional standing counsel, on behalf of the Union Territory of Jammu & Kashmir has also supported the grant of the contract in favour of the Appellant, submitting that the Tender Opening Committee, being an expert body and having scrutinised the documents supplied by the Appellant, cannot be second-guessed by the judgment of the High Court.

On the other hand, the learned senior Counsel for JK Roadways contended that the work experience certificates supplied by the Appellant were in the name of “Galaxy Agencies” and therefore, could not be counted. He vehemently argued that the Appellant did not possess a service licence for the relevant period, the licence having expired on 31.03.2020 and not having been renewed by the General Order, when properly read.

Terms and Conditions/Qualifying Criteria

27. The firm/association shall have working experience of at least Five years with documentary proof and work should not [be] less [than] 2 Crores.

31. The firm/tenderer should have owned at least 30 nos. of vehicles both HMV/LMV and attached 200 vehicles with the firm alongwith documentary proof.

The Hon’ble Supreme Court observed that the Condition No. 31 of the N.I.T. would show that the 30 vehicles referred to, are “both HMV/LMV”. The tendering authority has construed this condition to mean that both types of vehicles, i.e., HMV and LMV, need to be included in the list of the 30 vehicles submitted by each bidder. Also, the decision, the authority that authors the tender document is the best person to understand and appreciate its requirements, and thus, its interpretation should not be second-guessed by a court in judicial review proceedings, which was held in various judgments was noted. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., 2016 (16) SCC 818, this Court held:

“We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.”(Para.15 of Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd.)

Further, in the recent judgment in Silppi Constructions Contractors v. Union of India, 2019 SCC OnLine SC 1133, it was held as follows:

“The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the state instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realize that the authority floating the tender is the best judge of its requirements and, therefore, the court’s interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case.”(Para.20 of Silppi Constructions Contractors v. Union of India)

Thus, based on the above findings, the Court held that, the Division Bench ought not to have interfered with by giving its own interpretation and not giving proper credence to the word “both” appearing in Condition No. 31 of the N.I.T. In consideration to Condition No. 27 of the N.I.T prescribing work experience of at least 5 years of not less than the value of Rs. 2 crores is concerned, it was held that, the expert body, being the Tender Opening Committee, consisting of four members, the eligibility condition is satisfied by the Appellant. Thus, the Division Bench’s judgment is to be set aside and judgment of learned Single Judge is to be restored.

Therefore, the appeal was disposed accordingly.

M. Nandhitha



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